Payment To Contractors
Tue 11th Dec, 2012
As part of the 2011/12 Federal Budget, the Government announced the introduction of taxable payment reporting for businesses in the building and construction industry. This means that you will need to report to the ATO the total payments you make to each contractor for building and construction services each year, starting from 1 July 2012.
Who needs to report contractor payments?
You will need to lodge a Taxable Payments Annual Report if the following applies:
- You are a business that is primarily in the building and construction industry.
- You make payments to contractors for building and construction services.
- You have an Australian Business Number (ABN).
- You are considered to be a business that is primarily in the building and construction industry if:
- In the current or previous financial year, 50% or more of your business income is derived from providing building and construction services; or
- In the current or previous financial year, 50% or more of your business activity relates to building and construction services.
What do you need to report?
For each contractor you will need to report the following:
- Gross amount paid for the financial year (including GST).
- GST amount paid.
What does this mean for contractors?
If you are a contractor and do not pay other contractors then you do not need to submit a Taxable Payments Annual Report. From 1 July 2012, businesses that are primarily in the building and construction industry that pay you for building and construction services will be required to report those payments to the ATO. That information will be used by the ATO to detect contractors who may not have included all of their income on their lodged tax returns.
Are you a business in the building and construction industry that pays contractors for building and construction services?
Now, before you say 'NO' this also includes the following industries:
Examples of building and construction services
Below is a list of occupations and work activities that satisfy the definition of building and construction services:
- Architectural work (including drafting and design)
- Asphalt and bitumen work
- Assembly, installation or erection of prefabricated houses
- Block laying
- Building of room components (for example, kitchens, bathroom components, laundry components, cupboards, etc)
- Cabinet making (including joinery and off-site fabrication for installation at a building site)
- Cable laying
- Communications construction
- Concreting (including formwork, pouring and finishing)
- Construction and sealing roads
- Construction management
- Distribution line construction
- Drainage work
- Electrical machinery, heavy, installation (on-site assembly)
- Electrical work
- Electrical construction
- Elevator and escalator installation and work
- Equipment rental with operator (if there is no operator, it is just rental of a good and not a building and construction activity)
- Erection of frames
- Erection of scaffolding
- Excavation and grading
- Flood control system construction
- Flooring (for example, tiling, laying carpet, laying linoleum, timber flooring, floating floors, resilient flooring, slate tiles, etc)
- Foundation work
- Gas plumbing
- Glass and glazing work
- Hanging or installing doors
- Installation of fittings
- Installation of hard-wired alarm systems (security, fire, smoke, etc)
- Installation of hot water systems
- Installation of pre-fabricated components (for example, kitchens, bathroom components, laundry components, cupboards, etc)
- Installation of pre-fabricated temperature controlled structures
- Installation of septic tanks
- Installation of solar devices (for example, hot water or electricity connections)
- Installation of tanks
- Installation of window frames
- Installation of windows
- Installation or work on devices for heating and cooling
- Insulation work (walls, roofs, windows, etc)
- Internet infrastructure construction
- Irrigation system construction
- Land clearing
- Landscaping construction (including paving and design)
- Levelling sites
- Painting (internal and external surfaces, including roofs)
- Pile driving
- Pipeline construction
- Plastering (or other wall and ceiling construction)
- Plumbing work
- Preparation of site
- Project management
- Rendering (or other internal or external surface finishes)
- Retaining wall construction
- River work construction
- Roofing and guttering
- Sewage or stormwater drainage system construction
- Swimming pool installation
- Swimming pool construction (below ground concrete or fibreglass)
- Tiling (walls etc)
- Timber work
- Waterproofing interior and exterior surfaces